A submission from four federal departments to a Senate inquiry into the Newstart Allowance says the OECD acknowledges that a rise in the base rate from $245 a week “has the distinct disadvantage of reducing employment incentives, especially for those who can only obtain low-paying employment”.
A spokesman for Mr Shorten said: “The submission is obviously the government’s position” despite it previously saying it had a more open mind. “I’d also point you to what the minister had to say about this to you on Sky Agenda at the end of last month.”
In the interview, Mr Shorten said he wanted to look at what could be done to break intergenerational cycles of long-term unemployment. “Intergenerational unemployment is a disaster for generations of people.
“But by the same token, I am fully aware that trying to get along on $249 a week is an incredibly difficult ask.”
Mr Shorten is coming under pressure from the union movement to overhaul the welfare system. The ACTU will today declare major reform of the income support system is vital to help unemployed people find decent, secure work. ACTU president Ged Kearney said reform must start with a $50-a-week rise to Newstart, which had not increased in real terms since the early 1990s and was barely enough to live on, let alone pay for the costs of finding a decent job. “The rate . . . is just 18 per cent of average wages . . . and is widely regarded as a major cause of entrenching people in long-term poverty, with insecure work playing a large role,” she said.
The ACTU wants Newstart raised to the level at which the payment starts to be withdrawn when people begin work, and a wider independent inquiry into the effects of insecure work on welfare.
Unions NSW has called for the Youth Allowance to be increased by $50 a week and indexed in line with pension payments. It wants the income threshold to be increased by $25 a week, allowing Youth Allowance recipients to earn $450 a fortnight before their payments are reduced. The government submission claims an increase to the dole would not assist in maintaining the “fundamental character of Newstart Allowance as a payment that predominantly supports work re-engagement”.
“Work incentives are built into the design of Newstart Allowance and a substantial increase in Newstart payment rates would reduce the incentive for some recipients to move off payment and into self-supporting work”.
The Senate inquiry follows lobbying by business and welfare to increase Newstart, as single mothers face losing an average $50 a week after being shifted from the parenting payment to the dole from January.
The joint submission — from the Department of Education, Employment and Workplace Relations, the Department of Families, the Department of Human Services and the Department of Industry — seeks to blunt support for a $50-a-week rise to the dole.
Peter Whiteford of the Crawford School of Public Policy at the Australian National University argues that since 1996 payments for the single unemployed have fallen from 23.5 per cent of the average wage for males to 19.5 per cent.